Tech Startups Say New Pay Rules for H-1B Visas Are Unaffordable | Hacker News Reader

Tech Startups Say New Pay Rules for H-1B Visas Are Unaffordable

wsj.com

33 pointslxm75 comments

The top H1-B employers are outsourcing onshoring consulting companies who bring foreign employees to the US and typically underpay them. These companies then farm these people out at their actual value.

This policy is put in place specifically to ensure that when a foreign worker is brought to the US that they are paid what they are worth and that they are not used to undercut American labor.

But a rule needs to have a second-order thinking. here there is lot of unintended side effects. one such https://www.insidehighered.com/news/2020/10/21/colleges-sue-...

I doubt those effects are unintended.

A summary of the changes follows:

"H1B applicants will need to be earning a salary equivalent to the 45th percentile of their profession's salary if they're an entry-level worker, rising to 95th percentile for higher-skilled workers. In the past, the boundaries were set at the 17th and 67th percentiles respectively."

I work in the Higher Ed space and it is a common practice to use cheap student labor (particularly captive international student labor) J1/F1 holders who are then transferred into OPT for a year and then onto H1 status for an additional six years of servitude/captivity.

I want to be clear that I am not opposed to immigration or foreign labor. Rather, I oppose treating these employees as a cheap source of labor. It is unfair to them and deflates pay for all employees. I actually like programs like OPT that provide a path for international students to begin to repay what is often huge debt, particularly when compared to wages in their home countries. They should however be paid fairly.

I would like to conclude with this.

I have a friend who recently applied for a senior position at a private university (one with a name you would recognize). The positional called for a data scientist with ML and AI experience. I know because they asked me for a reference. They were offered the position but told that the absolute maximum the university would pay was $65k per year as that was what the former employee (a graduate who they transitioned to an H1 visa) was paid.

I suspect the Yale case is basically this as well. A university that wants to avoid paying the prevailing wage and has been able to avoid that by exploiting former international graduates. If they feel that either their employee is not a level 4 or that the prevailing wage estimates are wrong they can appeal.

This is exactly the intended effect. Cuts the middleman out of what is an incredibly common sweatshop tactic.

Everyone thinking the US is overly strict needs to look at how EU countries regard this with their priority principles in residence/work permitting.

I have personally been in position of living with $70K a year in SanFrancisco startup. This is back in 2013. While I accepted the offer thinking it will suffice I was living hand to mouth. I was spending my energy fighting with budgeting and spending my energy trying to save up while other with settled backgrounds were fine. In the end I lost my motivation and ended up leaving for a higher paying offer in 9 months. I have no sympathy for any of these low paying companies. They should pay what an engineer deserves. It’s pure exploitation and I walked right into it.

I got $65k in 2015. I know your pain well. I was trying to break into the area as a graduate from the PNW. No one but small startups would reply and they took advantage of my dwindling savings. My story is similar as yours as I had nowhere else to go since no other places in the country were responding but all these startups in the bay area. They were exploitative assholes and knew it completely. I never stopped interviewing and found a place eventually that paid the normal $110k/yr for entry-level positions but it took about a year after I started that first post-graduation job. Pretty terrible experience up until that moment.

Guess I should mention - I wasn't even on H1B. I'm a US citizen. I feel bad for people on H1B who have to live like that and can't escape that level of exploitation. I think it hurts everyone involved.

The San Francisco median household income in 2012 was $74,922 (https://www.census.gov/newsroom/press-releases/2013/cb13-r85...). If you were living "hand to mouth", you should give some serious consideration to just exactly how many others in San Francisco were living, often supporting many more family members than you were.

I moved from a much smaller city to Seattle for a job that paid more (even after a CoL adjustment) but ended up moving back because I felt poorer in Seattle than I did in my old city.

A big part of it is that most of my acquaintances were paid significantly more than me. When they go out to eat dropping $40 on lunch and drinks was no big deal. I would imagine OPs issue could be similar. An engineer at a startup making ~75k in SF is likely hanging out with engineers who make double that.

That is a completely bogus statistic. Not only does the "San Francisco Metro Area" include Oakland it also excludes Palo Alto.

I lived in SF and worked in tech and I know perfectly well what @maxpert speaks of. Some of the best years of my life, But the only way I could afford to live there was to live in a 1 bedroom apartment with two roommates.

Le gasp! Maybe the whole point was to import cheap labor and force them to work for you for decades before gaining citizenship.

I'm all for globalization, but a country should take care of its own people first.

> New restrictions intended to protect U.S. workers curb access to pool of highly skilled foreign labor

There are thousands of software engineers out of work or fresh out of school looking for their first job. Why not hire them? Lower your requirements if necessary, and train your new employees on the job. Groom them, mentor them, teach them the technologies they need to know.

You’ve addressed cost but not mobility. Citizens have agency to take their new skills and move to other companies if their wages or career opportunities stagnate. H1Bs do not have this luxury. If they switch they risk losing their place in line.

This is an additional policy modification that is required on top of pay rule changes.

So that means the companies need to be places that people want to work? Working on important stuff, getting good benefits? Or listening to their employees when the employees warn the company that the product is bad or unethical???

Still a bonus.

Because they just aren’t that good? Just because someone calls themselves a software engineer, or had a degree in computer science, it doesn’t mean they can take the place of a strong, seasoned engineer. The market is so competitive it’s pretty absurd to think anyone is being passed over because it’s cheaper to hire people on visas, at least when it comes to software engineers.

...that’s why he said to train them and mentor them.

There's been a general trend of companies being unwilling to invest in workers over the past decades. And after seeing their parents get knifed in the back by believing in the "job for life" concept that worked for their grandparents, the two-way loyalty of that system is completely absent in the current generation. It's been replaced with cynicism and mistrust.

So it's kind of a prisoner's dilemma. If you're a company and you invest heavily in junior talent, they'll probably leave for greener pastures ASAP. And if you're an employee who stands by an employer who gave you an initial leg up, you'll probably get fired after an aquisition/re-org/etc, and you'll find yourself with very narrow work experience.

FAANG companies manage this with "golden handcuff" stock vesting schedules, where you'll leave 6-7 figures on the table if you ever walk, but that's kind of the problem. It's hard for small orgs to compete for decades on pure cash compensation, and they can't be trusted to provide stability for decades.

Job for life will never come back, just like wife/husband for life.

Tinder makes it too easy to switch partners when the sexual marketplace values change, and it's the same for job hunting: it's just too easy to do for both parties.

> Why not hire them? Lower your requirements if necessary, and train your new employees on the job. Groom them, mentor them, teach them the technologies they need to know.

I think it's great if a company's willing to do that, but if they have the financial ability to pay employees to grow into the employees they need, they also have the financial ability to just pay higher salaries in the first place.

That is, this rule doesn't hurt big employers, who can both pay big salaries to qualified candidates (of any citizenship - and often can pay big salaries to qualified candidates by setting up an office in their country if it's hard enough to hire in this one) and invest in training up workers, but it does hurt smaller ones. Smaller companies, by their nature, have less funding to invest in long-term gains - they need to ship quickly if they don't want to go out of business.

Now, there may well be good reasons to conclude that that big entrenched employers are good for society and startups should face an uphill battle competing on talent, but let's not pretend this doesn't hurt small companies.

"How and Why Government, Universities, and Industry Create Domestic Labor Shortages of Scientists and High-Tech Workers", By Eric R Weinstein PhD

[Hosted at NBER from 1998-2017 where the author was at one time Co-Director / Co-Founder of the Sloan Foundation funded Program on the Economics of Advanced Training / Science and Engineering Workforce Project (PEAT/SEWP)

https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_N...

https://twitter.com/EricRWeinstein/status/107032731818526720...

Do you think the "why" has anything to do with the blow-back DuPont experienced as a consequence of manufacturing napalm during the Vietnam War?

DOD has extremely talented strategists, and an infinite simulation budget. Without considering the willingness of the workforce to do as directed without question, I can't see a reason this would be in the long-term US strategic interest (as conceptualized within DOD).

Or, have the strategic questions been subordinated to political ones in the absence of a peer adversary?

That's interesting, but I think a more basic motive is simply that we reached a limit to postwar growth in the early 70s, and this move was a way to keep up the metrics (embedded growth obligations), giving the appearance of growth, but actually taking it out of the wages of scientists and engineers. This is a terrible thing, because it's a particularly insidious form of eating your seed corn, in that you really don't see the full effects for decades. Think of all of the scientific advances we ought to see by now that aren't just your phone and laptop...

And those phone and laptop advancements are courtesy of the Taiwanese.

Came for ERW, was not disappointed.

Oh that's terrible. You have to pay prospective immigrants the same wage as a citizen? I feel zero sympathy for you.

https://nfap.com/wp-content/uploads/2020/10/Analysis-of-DOL-... (via https://www.forbes.com/sites/stuartanderson/2020/11/02/flaw-...) has a longer description of what "the same wage" means here:

> The new DOL wage system requires employers to pay exactly $100 an hour, or $208,000 a year, for over 18,000 combinations of occupations and geographic labor markets, regardless of skill level and position, NFAP research found, because DOL cannot provide prevailing wage data for the occupations under the new system. This takes place for some of the most common high-skilled occupations in America’s leading hightech area.

While there certainly are citizens getting paid $208,000 a year for certain high-skilled roles, I think it is entirely plausible that for many roles, the competitive wage is far below that and there are not enough American citizens who can fill those roles even for $208,000.

(Or, put another way, for certain roles, if they can't find citizens available and qualified to do the work, employers will simply choose not to engage in whatever business they were considering engaging in. There's no way that's good for the American economy.)

>there are not enough American citizens who can fill those roles even for $208,000.

Given that it's possible to train people, that condition cannot occur. Maybe "no cost-effective American citizens," or "no quickly available American citizens," but the state of there being absolutely no possible way to fill a role with an American citizen, cannot happen.

Correct, I mean no cost-effective American citizens. (Or, really, I do literally mean people who can fill those roles - if they need to be trained, and a company wants to train them, awesome, but they're not actually filling the role until they've been trained.)

Businesses will not do cost-ineffective things. If they cannot pursue a venture profitably, they won't pursue it. The question is whether we're better off with companies hiring qualified foreign workers for sub-$208,000 wages to do work in America or not hiring anyone and not doing the work.

I don't really see a problem with anything above actually. If a certain job role is so covetted, they [can &| should have to] raise the salary to recruit an American, or pay a prospective immigrant a life changing salary.

If a company objects to paying the market price salary for Americans they're totally free to outsource their work to foreign workers for whatever price those workers are willing to do so. But nobody coming to America should be short changed a salary because of their national origin. The loser in this is Big SV who has built an empire taking advantage of prospective immigrants.

Outsourcing the work is exactly what they're going to do (all the more now that everyone's spent most of the year figuring out how to work remotely). The question I'm asking is, does that help America?

If you want to help America, it seems to me that allowing American businesses to grow the American economy is a straightforward means to do so, and telling American businesses to move their work elsewhere is a straightforward means to do the exact opposite.

Meanwhile, if you want to help H-1B immigrants to not be taken advantage of (which I personally think is at least as important), stop handcuffing them to their employers - do not give employers the ability to threaten them with deportation along with unemployment, and allow them to change jobs while being sponsored for a green card. Then they can compete freely in the labor market as well as citizens can, and their wages will rise naturally. Anything short of that is more government fiddling in the market, usually to the benefit of those who have won the game of regulatory capture.

It absolutely helps America, and the world. One only has to look at the history of manufacturing, labor unions, and misguided attempts to 'keep jobs on American soil' to see why the wage fixation approach fails. What does work is defining the trend, then selling the knowledge while we work on the next big thing. That's been a money maker for America and has benefited the world too via secondary effects. If we get out-innovated, well, we deserve it, fair is fair.

Ps upvoted you for a great response. I absolutely agree with you on the other points about threatening and harassment.

While it may work out that many roles would require a $200k salary, this is just not how the new rules work. The changes proposed are this:

Does anyone feel it was the right thing to do to bring foreign laborer into the domestic market at the 17 percentile? In my opinion, that is exploitative and clearly not fair to the international worker nor any domestic worker potentially displaced.

Hmm they increased the minimum pay, but are H1-Bs still tied to an employer?

Allowing them to job hop easier would have brought salaries up to market value anyway. Guess it would have given them too much freedom?

I think you would model that as a type of green card, rather than a temporary work visa

The big difference is that so called green cards convey permanent residency in addition to job mobility. I would certainly support the idea that H-1B holders should be allowed job mobility. My guess is that Employers not the government stand in the way of that kind of change though.

Unfortunately that would require an act of Congress.

The goal of the visa is to bring workers temporarily as there are no Americans to fill the role. That’s why it’s tied to a company.

I don’t disagree that if we’re attracting the best and brightest, they should go through H1-B. We should be giving them green cards.

The top comment here says:

> The top H1-B employers are outsourcing onshoring consulting companies who bring foreign employees to the US and typically underpay them. These companies then farm these people out at their actual value.

Many other comments echo it too. This is wrong.

The outsourcing companies use H-1Bs mostly as local liaisons for their remote teams. They all have businesses that annually generate _billions_ of dollars in revenue. That revenue is generated by the labor arbitrage between countries, not shaving off few dollars per hour in the wages of their H-1B employees.

The real wage abuse comes from the tail of the distribution - staffing companies, owned and operated by American citizens. Many of these citizens were immigrants originally. If you look at the cases DOJ has brought against H-1B abuses, you will notice that many of these people operate _multiple_ companies. Each of these companies get only few H-1Bs per year, but as an aggregate they get a significant portion of the H-1B quota annually.

If wage abuse is the concern, blaming outsourcers is barking up the wrong tree, IMO.

Here are the top H1b-Sponsors and the number of visas they sponsor per year. Take out the handful of "Big Tech" FANG types and JPMorgan and what is left? Is this not then exactly a list of consulting firms importing cheap international labor and then farming them out at their true worth?

1 Cognizant Technology Solutions 28,526

2 Infosys 21,473

3 Tata Consultancy Services 11,868

4 Google 10,577

5 Ernst & Young 8,893

6 Capgemini 8,411

7 Deloitte & Touche 8,258

8 Amazon.Com Services 7,705

9 IBM 7,237

10 Microsoft 6,041

11 Accenture 5,654

12 Hcl America 4,688

13 Wipro 4,291 $77,533

14 Tech Mahindra (Americas)

15 Larsen & Toubro Infotech 3,625

16 Facebook 3,212

17 Wal-Mart Associates 2,277

18 L&T Technology Services 2,117

19 Syntel 1,893

20 Jpmorgan Chase 1,796

21 Salesforce.Com 1,722

22 Amazon Web Services 1,711

23 Apple 1,708

24 Intel 1,683

25 Compunnel Software Group 1,667

Tata explicitly advertises their services are "Onshore-Offshore".

When a FANG like google hires an H1-B employee, their average salary is $143,373. When Tata or Cognizant hires an H1-B employee, their average salary is $86,453. If we take the number of H-1B visas sponsored per year at Tata and Cognizant and compare their average salaries to their FANG counterparts it suggests a short changing of $2 billion per year.

> When a FANG like google hires an H1-B employee, their average salary is $143,373. When Tata or Cognizant hires an H1-B employee, their average salary is $86,453. If we take the number of H-1B visas sponsored per year at Tata and Cognizant and compare their average salaries to their FANG counterparts it suggests a short changing of $2 billion per year.

$2B is nothing to sneeze. But Cognizant made $16.7B last year; TCS made over $22B. My claim is that these companies make their revenues by selling the services of their outsourced teams located at low-cost locations. They hire H-1Bs to serve that business model.

There are H-1B wage abusers, but those are smaller staffing companies who individually have a small number of H-1Bs, but collectively own a big chunk of it.

(For this analysis, I am ignoring the fact that American citizens employed at companies that outsource to Cognizant or TCS pay significantly lower than FANG companies)

Everyone at tech startups are working remote right now, so I don't see the problem. The only reason they need to bring early employees into the United States is so they will have indentured employees who are left-loyal at the top of these companies so the investments can continue to be party controlled. H1-B as well are less likely to balk at being asked to do shady shit like businesses that rely on tracking people and selling user data. Privacy is generally a western idea traditionally not practiced outside the United States.

This might be better to look at from a capitalistic / wage-slave perspective rather than a left- or right- issue.

For your argument of ‘left-loyal’ to have any real value necessitates that the employees vote. After all, we’ve long not cared at all about the social stances of prisoners and felons and have equally stripped away their rights to vote. Same thing. You need to be able to defend that the politics of a non-voting immigrant matter.

WTF are you talking about? This isn't about voting or getting employees votes for the democrat party. H-1B cannot vote for the left but that is better to party hardliners than someone who votes right and hires right wing. This is 100% about making sure executives of tech companies remain leftists and members of the leftist pro-socialist party. H-1B is only one way they work to achieve this. Since 2015 they have created chief people/diversity officer roles which are nothing more than party officials who are given power to filter hires based on perceived party loyalty but in the name of combating "racism" which is pretty much envelops all leftist reasoning these days. They are hardcore leftists and trade blacklists between companies.

In the corporate world it is imperative to leftist managers and boards that they maintain political control of tech companies like google, twitter, amazon that both track every move and word of the populace as well as filter the content that people are allowed to see.

I truly don't understand the connection you're trying to imply here. Certainly there are many, many software engineers who are right-wing and who vote right and hire right-wing.

> In the corporate world it is imperative to leftist managers and boards that they maintain political control of tech companies like google, twitter, amazon that both track every move and word of the populace as well as filter the content that people are allowed to see.

This sounds like conspiracy theory and right-wing propaganda.

Hardly right-wing propaganda. California passed a law mandating that all corporate boards appoint minority directors. Minorities are nine times more likely to be affiliated with the leftist democrat party than republican. That is irrefutable. Leftists have worked hard to bind social identity with party affiliation in order to control tech companies that monitor and influence the population.

Software engineers have almost no power at tech companies and it is leftist managers who choose the people that conduct interviews. CPO/CDO operatives filter all candidates at tech companies, not only engineers. Their objective in filtering engineers is to prevent too many right wing employees.

> leftist democrat party

There is no such thing in the United States. There are leftist parties (with no actual electoral success at the state or federal level), and there is a major party called the Democratif Party (which is not leftist), but there is nothing that could reasonably, even approximately, be described as a “leftist democrat party”.

a name is just a name. In the US there are two parties so leftists fall in either one or the other. Frankly the tactics and motivations taken by the democrat party is exactly leftist: authoritarian, pro-censorship, trying to justify authoritarian takeover by claiming social progress.

> In the US there are two parties so leftists fall in either one or the other

No, in the US there are dozens (hundreds, IIRC) of parties, and leftists mostly don't fall in either of the major two, when they are in a party at all.

The 2020 democrat party falls under leftist authoritarian classification, a thin veneer of civil rights and progressive-ism on top of a thick marxist-lenenist regime shadowing the Chinese communist party's single party authoritarianism. It hates free speech, embraces censorship across the web and media, monitors and tracks people through control of big tech like apple and google, and seeks political control of corporations using the guise of social and racial activism. You can say it is not "leftist," but it certainly pretends to be.

> embraces censorship across the web and media, monitors and tracks people through control

This is certainly _both_ parties. Authoritarianism is a strong classification for both the left and right parties.

So they’re admitting this now? That there really never was a tech shortage? That the entire push for more H1-Bs was to take advantage of cheap labor? End the entire program.

Ending something is never an answer. We need to understand why such program was created in first place. Fine tune the program to get maximum benefit, than abolishing it. We need more optimization not removal. We need a well thought through solution and not half baked ruling intended to create confusion than a solution.

Facebook/Google since you guys are so about equality, feel free to post the average/stddev of what you pay white people vs h1b visa holders. I mean, its the same... right? There's no way the most woke of companies are taking advantage of foreigners..... Right?

We've all seen the notices posted in the employee break areas. It's wrong. The only people opposing this are the abusers.

While FANGS do employ a lot of H-1B workers, they pay them relatively well compared to what they are paid by consulting companies who exploit them.

The Average FANG H-1B salary is $143,373. While the average at Tata or Cognizant for an H1-B employee, is $86,453.

This is another from colleges which are affected by this rule. https://www.insidehighered.com/news/2020/10/21/colleges-sue-... , this is something not thought through

I thought the new wage rule would basically ruin the indian consultancy business model, and benefit H1B applicants as they would be payed a competitive wage and actually getting a visa. Wouldn't the typical bay area salary exceed the minimum requirements?

I can't read the article due to the paywall.

The number I've been hearing is that even early-career positions will have to pay at least $208k base salary (not including any equity) in the bay area, which seems totally out of reach for most companies.

Depends on what you define as "early-career". The rule is based on junior vs. senior positions. This article explains it well: https://news.efinancialcareers.com/us-en/3004591/h1b-visas-f...

In short, no $208k is not the minimum for junior positions, it just needs to be at or above the median wage for those positions.

If a company needs early-career talent H1-B might not be the right avenue. It was intended for highly skilled talent not available in-country.

Experienced talent in software engineering should clear 200k no problem.

H1-B portability would be great to see. It would encourage companies to treat people as humans, not endentured servants.

While the $200k number gets tossed around a lot, the proposed rule is actually:

> I can't read the article due to the paywall.

https://www.wsj.com/articles/tech-startups-say-new-pay-rules...

I've only seen the H1-B process vicariously though a colleague (my lab instructor) who finished her MSc in Microbiology. She and I (a Bsc grad) were both job hunting in the horrible job market in 2009 and helped each other with leads. After several interviews, mostly dead ends, she ended up accepting the first job that would allow her (Indian Citizen) to get sponsored as she only had 2 weeks left on her student Visa before she would have to go back to India.

If I recall correctly she ended up lasting a year before going back to get her PhD in Microbiology as she had no desire to have that carrot dangled in front of her for the rest of her life.

Oddly enough, I being a US citizen, had to re-interview for my job every year after the diagnostics firm I worked for was bought-out by a Mega Pharma Corp who was closing every 'non-essential' department that didn't help it extend its patents on drugs it had exclusive rights to.

What I'm trying to say is that while the H1-B system is horrible, the US citizen path during financial crises even in STEM fields isn't great either. especially if you incurred 10-100ks in debt and have the constant pressure of having to pay that down. It's why I hope we move away from the notion of a tuition-free university model to a more practical and applicable apprenticeship model that Germany and Switzerland have. That would lessen the burden on so many that the prices for University would have to come down.

Everything I was taught in University was obsolete, or entirely inapplicable to my field of study (diagnostics) and I saw 1 single slide of the apparatus I would use in my career, nothing more in nearly 5 years of undergrad.

Had I not gone to the Scrips Research Institute for my training (initially free but also paid out of pocket for $50/hr training hours plus re-agents), and downloaded hacked versions of FloJo on Newsgroups I would never been able to stand out from the 50-1 applicants for every job back then. After 3.5 years of the pressure to pay back the debt, I swore I'd never go back to a Lab for the rest of my Life.

What really should be the conversation here is employer wage reform for all; I personally don't think Unions are a good model, but something needs to occur. Everyone with a vested interest in this model touts that there is some horrible shortage of STEM degree holders, when in reality so many people with STEM degrees work(ed) at bars, restaurants, cafes, and other retail chains because they knew they could get cheap foreign labor through this Visa model.

Good

These rules would undoubtedly be reversed under a Biden-Harris administration.

It seems unlikely that the new rules last with a Biden administration.

Waste of digital ink. Any roadblocks to importing foreign labor will be gone very soon.

The rules are put in place to help these people start companies in their own countries?

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